Is Working at Home Productive?

Many of you know that I often work at home or at a coffee shop because distractions at the office make it difficult to write or conduct other forms of research. However, many employers believe that productivity would plunge if they allowed their employees to work at home. There are other factors to consider, however. Not only do employers need to take into account whether employees are more or less productive, but they also need to consider the rent they would save if a large number of their employees worked at home. That is, if the savings derived from lower rental payments offset the expected drop in productivity, then letting employees work at home would still make economic sense.

The assumption that productivity will drop may be wrong, however. James Liang (founder and chairman of Ctrip, a big Chinese travel website similar to Expedia, and Nicholas Bloom, a labor economist at Stanford, along with co-authors John Roberts and Zhichun Jenny Ying, recently completed a study called “Does Working From Home Work? Evidence From a Chinese Experiment,” in which Ctrip employees were randomized into work-at-home groups and work-at-the-office groups, and they found that employee productivity did not drop. In fact, it increased by 13%. Moreover, another study by Christine Hoehner, a public-health professor at Washington University, found that commuting is bad for our health.

All this and more is covered in the latest Freakonomics podcast, which you can listen to here ("There’s Cake in the Breakroom!") and is only 6:28 minutes long. You can also download it from iTunes.